Options for Giving—Deferred Gifts

Bequests

  • Outright bequests, as well as certain bequests in trust, are not subject to estate taxes.
  • Actual cost is less than face value of gift because of tax benefits to estate.
  • Bequest can take any of the following forms:
    • Bequest of a dollar amount of particular securities or other property.
    • Residual bequest of all or portion of estate after payment of specific amounts to other beneficiaries
    • Contingent bequest to take effect if other beneficiaries die before the donor
  • A bequest can often be arranged simply with the addition of a codicil amending an existing will.

Charitable Gift Annuity

  • Provides a fixed income for the lifetime(s) of one or two annuitants.
  • Amount paid determined by the rates recommended by the American Council on Gift Annuities.
  • The older the annuitant, the higher the level of income.
  • Portion of gift and income are tax deductible.

Deferred Gift Annuity

  • Offers increased income and tax benefits.
  • All basic features and benefits of a gift annuity.
  • Income delayed until a future date chosen by donor.
  • Rate of return and tax deduction dependent on length of income delay.

Life Income Trusts

  • Trust assets are funds or property contributed by donor (usually $100,000 or more).
  • Flexibility in type of property that can be donated.
  • Real estate and municipal bonds may be used.
  • Provides a fixed amount of income. (Charitable Remainder Annuity Trust)
  • Provides a variable level of income. (Charitable Remainder Unitrust)

Charitable Lead Trust

  • Donor provides assets for use for a limited period of time.
  • Funds are invested to provide income to your institution.
  • Assets returned to donor or to estate at end of designated period.
  • Can fulfill a pledge while reducing estate and gift taxes that might otherwise be due on assets given outright to heirs.

Wealth Replacement Trust

  • Protects inheritance interests of heirs.
  • Contributes assets to your organization either outright or through planned giving vehicles.
  • Using resulting tax savings, donor purchases a life insurance policy with heirs as beneficiaries.

Life Insurance

  • Make your organization sole owner and beneficiary of paid-up policy.
  • Receive income tax deduction for the cash surrender value of policy.
  • If policy not fully paid, continue to pay premiums.
  • Receive tax deduction for annual premium amounts.

Pooled Income Fund

  • Operates much like a mutual fund.
  • Contributions pooled and managed by investment advisors.
  • Income paid to donor and second person, if desired, until beneficiaries are deceased.
  • Income fluctuates based on earnings of fund.
  • Immediate tax deduction for portion of gift.
  • Avoids capital gains tax if appreciated securities are given.
  • Gifts to Pooled Income Fund are irrevocable.
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